Share buy back

[mazacini]

I'm involved with a private company where we are trying to buy out one of the shareholders. The company has not been trading a year, and there are no reserves. I was told that the company needed reserves to purchase its own shares. Is this true? Does this mean that the company cannot buy the shares? Should the shareholders buy the shares instead?

 

[oopsbuddy]

This is a very complex area for the inexperienced. There are lots of options, but there are legal and tax implications with each. Do you have an accountant who can advise you on these matters? You should definitely not proceed without proper advice.

 

[mazacini]

I was hoping it migtn't be so complicated! However, having scoured the interent for a solution without sucess, I have now taken your advice and will be talking to a Company Secretarial professional.

 

[oopsbuddy]

If the company has only been trading for a year and has no reserves, how much are the transferring shareholder's shares worth? Why are you particularly interested in the company buy-back option? This would be more worthwhile if the value of the shares was great, and the company had reserves, but neither SEEMS likely (s.t. confirmation).